Is ObamaCare (Affordable Health Care Act) a Tax or a Penalty? – The Short and Simple Answer – a Public Service Announcement

With all the hubbub about politics, and one’s pocket book, and the war of words between Democrats and Republican’s – it is without doubt, one of the biggest disservices to the American People that the question of whether or not Obama Care is a Tax or a Penalty be answered. It is constantly asked.

The Democrats want the people to view it as a penalty – if you don’t have insurance, and are uninsured – then you pay a “penalty”

Using the Massachusetts Model - similar in “penalty structure” to the Federal Model
When it comes time for those of you who are not offered employer insurance, or if offered, cannot afford the insurance or, if unavailable, one cannot still afford the insurance – one can pay a penalty to the State of Massachusetts, Department of Revenue, which is sometimes up to two-thirds less than having to buy insurance, but at least – one is not going to jail for not paying their “penalty”.

Additionally, the penalty is paid to the Department of Revenue, the department that is directly responsible for all taxes in Massachusetts.

Moreover the employer, the employed, the unemployed, the underemployed, must produce proof of insurance to the state of Massachusetts in order to file their tax returns – in other words, there is no way around not having health insurance in Massachusetts - if one does not – one pays the “fee” to the Commonwealth.

Under the Affordable Health Care Act, the situation is similar, except forms will be going to the Internal Revenue Service, if one does not have the insurance papers, or proof of insurance, one is assessed a penalty of up to $25,000, and if one can’t pay that penalty? – then one is subject to interest on the outstanding balance, one might have wages garnished, or even social security garnished, and incur incredible legal fees, or face prison. This is for every single American that is not insured, it does not affect those on Medicaid, or Medicare, or those who have insurance through employers, but those who do not have the luxury of either, and there are millions of them – all earning anywhere from $30K to under $200K per year.

So, is it or is it not a tax?

The rule of thumb is this: if you pay a fee or a penalty to an agency such as the Internal Revenue Service, must include supporting data on your Tax Returns in order to either become except from the penalty or pay the penalty – then that penalty – on your Tax Returns, and the monies that you pay – is a TAX.

When money comes out of your pocket and is placed in the hands of a government – call it a fee, call it a penalty – if it sounds more politically appealing, but at the end of the day, the citizen who’s wallet is slimmer, who’s mortgaging their home, if they can to pay the fees levied by the IRS for not having health insurance, is having their wages, or tax returns garnished for not having health insurance, and has to make any payments to an agency who’s sole specific purpose is to collect taxes for the Federal Government – what does that make the money leaving one’s pocket and going to the Federal government? – A Tax

Therefore, a penalty or a fee is just a nice word used by politicians to get you to pay a – Tax.

It’s simple, it’s logical, and now the American Public is being forced to purchase an item, and if they cannot afford to purchase that item? – They are being taxed, and if they do not pay that tax, they are considered “criminal”.

More-over, if one lives in a state that already has Health Care Reform with penalties in place for non-compliance and those “taxes” are sent to a Department of Revenue, then one will be liable to pay two fines – or two taxes – just like one does the income penalty – or the federal income penalty, the taxes one pays or is penalized for working for a living. That’s a stretch, but it allows one to understand that every nickel or dime one is paying to a state or government is not a “fee” or “penalty” is it a tax. The word tax being unpopular, is often interchanged with “fee” or “penalty” but is, and remains a tax.

Mass. Health Care Review: Premiums to Rise 10% in 2010 with Pre-Existing Conditions subject to waiting period – U.S. Congress Adopts Mass. Model

Nancy Pelosi - Taking a Page from the Massachusetts Health Care Model? image cinisworld

Massachusettsresidents who hold private insurance plans are bracing for a 10% increase in the cost of their premiums in 2010. Blue Cross/Blue Shield, the Commonwealth’s largest insurer, has set premium increases for individuals at 10 to 11% while those who are self-employed, can anticipate a higher increase. This can mean up to a $40 per month drain on families who are already burdened with risings costs to do the rise in Massachusetts taxes imposed this year in order to cover the Commonwealth’s deficit. Subsidies for the Massachusetts Health Insurance model, remain one of the Commonwealth’s largest expenditures, and with an ever decreasing tax base, one can anticipate yet another round in taxes in 2010 to help foot the bill.

What about pre-existing conditions? Under Massachusetts laws, Pre-exiting conditions are not excluded, rather subject to a “waiting period” of up to six months.

Fees versus taxes, waiting periods versus exclusions; it’s all about parsing a phrase.

Those who live in the Commonwealth and are not covered under the mandatory health insurance laws, face paying a “fee” every year to the Massachusetts Division of Insurance. Although Massachusetts boasts the highest rate of insured’s in the nation, individuals and families who cannot afford the premiums, yet earn too much to qualify for subsidies are met with an additional tax burden.
Meanwhile, the few insurance carriers that are allowed to do business in the State, point to the 26 State mandated benefits they must cover as part of the reason for the increase.

The Health Care Reform Bill that Speaker Nancy Pelosi is blindly pushing through Congress, includes an interestingly similar feature to the Massachusetts model: under the proposed plan, those who are subject to pre-existing condition clause, will be subject to a “waiting period” of up to six months, before “Congress-Care” kicks in. Meanwhile, private insurance companies will be forced to pay into an ever increasing “risk pool” – driving up premiums for those who still have private insurance plans.

Although the Congressional version of Health Care Reform, has some level of approval from only 42% of the nations populace Ms. Pelosi’s’ intends to push the bill to a vote, despite an obvious message sent to those who would consider adding additional economic burdens to the nation this past Tuesday. Statewide wins for Conservatives in both Virginia and New Jersey, have been dismissed by the Speaker.

What is most startling is that the Speaker, and those Representatives in Congress who reside in the Commonwealth of Massachusetts, surely must have access to the data, yet they are willing to foist this flawed program on the rest of the nation. A common sense solution would be to allow for competition in the state (proposed by the House Republican’s), allowing only those benefits that relate to preventative care to be mandated, allowing insurers to offer plans that provide those “high price tag” benefits currently offered under the Massachusetts model (infertility treatments for example), at a higher rate, reducing the risks assessed across the board to consumers. To use the Massachusetts Model for the Nation is, in a word, economic suicide, which does little to aid those who are caught with a debilitating illness in a six month “waiting period”, and raises both premiums and taxes on those who are still employed.